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DECREE No

DECREE No. 78/2002/ND-CP OF OCTOBER 4, 2002 ON CREDIT FOR POOR PEOPLE AND OTHER POLICY BENEFICIARIES

THE GOVERNMENT

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the December 12, 1997 Credit Institution Law;

Pursuant to Resolution No.31/1999/QH10 of the Xth National Assembly, 6th session;

At the proposals of the State Bank Governor, the Minister of Finance, the Minister of Planning and Investment, the Minister of Labor, War Invalids and Social Affairs, the Minister of the Interior and the Minister-Director of the Government Office,

DECREES:

Chapter I

GENERAL PROVISIONS

Article 1.- Credit for poor people and other policy beneficiaries means the use of State-mobilized financial sources to provide preferential loans for poor people and other policy beneficiaries in service of production, business, job creation and life improvement, thereby contributing to the implementation of the national target program on hunger elimination and poverty alleviation, and social stability.

Article 2.- Poor people and other policy beneficiaries that may borrow preferential credit capital include:

1. Poor households;

2. Difficulty-hit pupils and students, who are studying in universities, colleges, intermediate vocational training or job-teaching schools;

3. Subjects that need loan capital for job creation under Resolution No.120/HDBT of April 11, 1992 of the Council of Ministers (now the Government).

4. Policy beneficiaries who go to labor abroad for definite terms;

5. Economic organizations and production and/or business households in islands, mountainous regions No.II or III and those covered by the Program on socio-economic development of mountainous, deep-lying and remote areas meeting with exceptional difficulties (hereinafter called Program 135);

6. Other subjects as decided by the Prime Minister.

Article 3.- Poor people and other policy beneficiaries (hereinafter called borrowers), when borrowing capital under the provisions of this Decree, shall not have to mortgage their properties, except for economic organizations being subjects defined in Clauses 3 and 5, Article 2 of this Decree. Particularly for poor households, they shall be exempt from administrative procedure fee when borrowing capital.

The loan security for economic organizations defined in Clauses 3 and 5, Article 2 of this Decree shall comply with the regulations of the Managing Board of the Social Policy Bank.

Article 4.-

1. To set up the Social Policy Bank so as to provide preferential credits for poor people and other policy beneficiaries on the basis of reorganizing the Bank for the Poor, which was set up under the Vietnam State Bank Governor�s Decision No.230/QD-NH5 of September 1, 1995.

2. The Social Policy Bank shall operate for non-profit purposes, have its solvency assured by the State and its compulsory reserve rate of 0% (zero percent); shall not have to participate in deposit insurance and shall be exempt from taxes as well as other State budget remittances.

3. The Social Policy Bank shall perform the following operations: mobilizing capital, lending, providing payment and treasury services and receiving entrusted preferential loan capital from local administrations, economic organizations, socio-political organizations, associations, societies, non-governmental organizations as well as individuals inside and outside the country for investment in socio-economic development programs and projects in localities.

4. The Social Policy Bank shall have the uniform management and administration apparatus throughout the country; be a legal person, have its charter capital, properties, seal and transaction system from central to local levels.

5. The Social Policy Bank shall be managed by its Managing Board, which has its representative boards in provinces, centrally-run cities, urban districts, rural districts, provincial towns and provincial capitals.

6. The Social Policy Bank shall be run by its general director.

Article 5.- The Social Policy Bank shall provide loans by the mode of entrusting them to credit institutions or socio-political organizations under entrustment contracts, or directly for the borrowers.

The loan provision for poor households shall be based on the results of discussion and selection by savings and capital-borrowing groups, which shall be set up by socio-political organizations or population communities at their own will in the communes� administrative territories and approved in writing by the commune-level People�s Committees. The savings and capital-borrowing groups shall operate under the guidance of the Social Policy Bank.

Article 6.- The financial, wage and allowance regimes for officials and employees as well as the setting up and use of funds, of the Social Policy Bank, shall be decided by the Prime Minister.

Chapter II

CAPITAL SOURCES

Article 7.- State budget capital sources

1. Charter capital;

2. Loan capital for hunger elimination, poverty alleviation, job creation and implementation of other social policies;

3. Annually, the People�s Committees at all levels are allowed to deduct part of the revenue surplus and expenditure savings of their budgets to increase the loan capital sources for poor people and other social policy beneficiaries in their respective localities.

4. ODA capital assigned by the Government.

Article 8.- Mobilized capital

1. Interest-bearing deposits, received from domestic and foreign organizations and individuals within the approved annual plans;

2. State-run credit institutions shall have to maintain at the Social Policy Bank a deposit balance equal to 2% of the balance of their capital sources mobilized in Vietnam dong by December 31 of the preceding year. The change in the above-mentioned deposit balance rate shall be decided by the Prime Minister. The State-run credit institutions� deposits at the Social Policy Bank shall bring in interests to be calculated according to the annual average interest rate for mobilized capital sources of credit institutions plus (+) the reasonable mobilization charge as agreed upon by the two parties;

3. Interest-free voluntary deposits of organizations and individuals at home and abroad;

4. Bond issuance with the Government guarantee, deposit certificates and other valuable papers;

5. Savings deposits of poor people.

Article 9.- Borrowed capital

1. Borrowings from financial and credit institutions at home and abroad;

2. Borrowings from postal savings and Vietnam Social Insurance;

3. Borrowings from the State Bank.

Article 10.- Non-refundable capital voluntarily contributed by individuals, economic organizations, financial and credit institutions, socio-political organizations, associations, societies and non-governmental organizations inside and outside the country.

Article 11.- Preferential loan capital entrusted by local administrations, economic organizations, socio-political organizations, associations, societies, non-governmental organizations and individuals inside and outside the country.

Article 12.- Other capital sources.

Chapter III

LENDING

Article 13.- Capital-borrowing conditions

1. For borrowers being poor households, they must have lawful residence addresses and be named on the lists of poor households, which shall be decided and certified by the commune-level People�s Committees according to the poverty standards promulgated by the Ministry of Labor, War Invalids and Social Affairs after they are discussed and selected by savings and capital-borrowing groups;

2. Borrowers being other policy beneficiaries shall comply with the State�s current regulations and the provisions of this Decree.

Article 14.- Loan capital shall be used for the following purposes:

1. Poor households; production and/or business households in islands, mountainous regions No.II and III and Program 135-covered areas, shall use loans for:

a/ Procuring materials and supplies, plant seeds and animal breeds; and paying for production and business services;

b/ Contributing capital to the execution of production and/or business cooperation projects already approved by competent authorities;

c/ Partly meeting their essential needs regarding accommodation, lighting, clean water and learning.

2. Economic organizations in islands, mountainous regions No.II and III and Program 135-covered communes shall use loan capital to cover expenses for production and business under the programs and projects already approved by competent authorities.

3. Difficulty-hit pupils and students shall use loan capital to buy learning equipment and cover expenses for their study at schools.

4. Borrowers being policy beneficiaries who go to labor abroad for definite terms shall use loan capital to pay training fees, service charges, deposits and airfares.

5. Borrowers being other subjects shall comply with decisions of the Prime Minister.

6. The entrusted preferential loan capital shall be used for purposes set by the entrusting party and inscribed in the entrustment contract.

Article 15.- Credit principles

1. Borrowers must use loan capital for the right purposes stated in their borrowing applications;

2. Borrowers must repay both debt principals and interests on schedule.

Article 16.- Lending level

The lending level for each loan suited to each subject borrowing preferential credit capital shall be decided and announced by the Managing Board of the Social Policy Bank on the basis of the loan capital demands and capital sources likely to be mobilized in each period.

Article 17.- Lending terms, debt extension, overdue debt conversion

1. The lending terms shall be determined on the basis of the borrowers� loan capital-use purposes and capital-retrieval time limits of the programs and projects with the borrowers� debt-repayment capability also taken into account.

2. In cases where borrowers fail to repay debts on schedule as already committed due to objective causes, they shall be considered by the Social Policy Bank for debt extension.

3. In cases where borrowers use capital for wrong purposes or refuse to repay their due debts though they are capable to do so, their debts shall be converted into overdue ones. The lending organizations shall coordinate with local administrations and/or socio-political organizations in applying measures to recover debts.

4. The lending terms, debt extension and overdue debt conversion shall be stipulated by the Managing Board of the Social Policy Bank.

Article 18.- Lending interest rate

1. The preferential lending interest rate shall be decided by the Prime Minister in each period at the proposal of the Managing Board of the Social Policy Bank and applicable uniformly throughout the country, except for economic organizations being subjects defined in Clauses 3 and 5, Article 5 of this Decree, which may enjoy region-II or region-III interest rate under decision of the Managing Board of the Social Policy Bank.

2. The overdue debt interest rate shall be equal to 130% of the lending interest rate.

Article 19.- The Social Policy Bank shall stipulate the lending order and procedures for each borrower, ensuring the simplicity, clarity and easy implementation.

Article 20.- Credit risks and handling thereof

1. Borrowers who fail to repay their debts due to such objective causes as natural calamities, fires, epidemics, changes in State policies or market price fluctuations shall be handled as follows:

a/ In cases where such occur on a wide scale, they shall be decided by the Prime Minister.

b/ In cases where such occur singly or locally, the debts shall be extended or handled with the risk reserve fund of the Social Policy Bank under decision of the Bank�s Managing Board.

2. For damage caused subjectively by borrowers, entrusted organizations or officials or employees of the Social Policy Bank, these subjects shall have to pay compensations and take responsibility therefor before law.

Chapter IV

RESPONSIBILITIES OF STATE MANAGEMENT AGENCIES

Article 21.- The Prime Minister

1. To direct the Finance Ministry, the Ministry of Planning and Investment and the State Bank to arrange capital sources for the allocation of enough charter capital to the Social Policy Bank upon its establishment, and the supplementation of its charter capital.

2. To direct the Finance Ministry and the Ministry of Planning and Investment to plan the increase of State budget capital sources so as to provide credits for poor people and other policy beneficiaries according to the annual plans.

3. To decide on the use and transfer of the Government�s ODA and foreign loan capital sources reserved for credits to be provided for poor people and other policy beneficiaries.

4. To decide on bond issuance with the Government guarantee in order to mobilize capital for the Social Policy Bank.

5. To decide on the handling of loans suffering from risks which occur on a wide scale due to objective causes.

Article 22.- The ministries, the ministerial-level agencies and the agencies attached to the Government shall, according to their respective jurisdictions, perform the function of State management over operation of the Social Policy Bank and create favorable conditions for its activities.

Article 23.- Basing itself on the national target program on hunger elimination, poverty alleviation and job creation, the Finance Ministry shall assume the prime responsibility and coordinate with the Ministry of Planning and Investment in incorporating the loan capital plan and deficit-offsetting plan in the annual and five-year State budget estimates to be submitted to the Prime Minister.

Article 24.- Agencies and organizations entitled to nominate their persons to participate in the Managing Board of the Social Policy Bank shall, apart from the specialized management functions according to their respective jurisdictions, have to perform the following tasks:

1. To advise the Government and the Prime Minister on basic undertakings, policies and solutions for the provision of preferential credit for poor people and other social beneficiaries.

2. To direct the application of specialized measures related to operation of the Social Policy Bank.

3. To nominate their competent representatives to participate in the Managing Board of the Social Policy Bank.

Article 25.- The presidents of the People�s Committees of the provinces and centrally-run cities shall have the responsibility to:

1. Direct the provincial/municipal Services, Departments, branches, local Steering Committees for hunger elimination and poverty alleviation program and district-level People�s Committees to coordinate with socio-political organizations in incorporating programs and projects on production and/or business, restructuring, selection of plant varieties and animal breeds, business lines, programs on technology transfer, industrial, agricultural, forestry and fishery promotion as well as market guidance into the use of credit capital; combining economic programs with infrastructure construction programs and socio-cultural programs so as to support the borrowers in using loan capital for the right purposes, with efficiency and at low risks.

2. Direct the implementation of resolutions of the People�s Councils on the deduction of part of the annual local budget revenue surplus and expenditure savings for transfer to the Social Policy Bank�s branches in localities according to the provisions in Clause 3, Article 7 of this Decree.

3. Decide on the setting up and supervise the operation of the representative boards of the Managing Board in their respective localities according to the provisions of the Social Policy Bank�s Organization and Operation Charter.

4. Direct the entrusted organizations in observing the credit policies for local borrowers, promptly handle violations, commend and reward organizations and/or individuals that make contributions to the Social Policy Bank�s operation.

5. Concentrate the local budgets� capital sources being lent to poor households and other policy beneficiaries defined in this Decree, including the local funds of loans for hunger elimination and poverty alleviation (if any), into the Social Policy Bank.

6. Within the scope of their respective tasks and powers, create favorable conditions for the Social Policy Bank�s operation.

Article 26.- The presidents of the district-level People�s Committees shall have the responsibility to:

1. Direct district branches and Steering Committees for hunger elimination and poverty alleviation programs to coordinate with socio-economic organizations in well performing the propagation and mobilization task and creating conditions for implementation of credit policies for borrowers in their respective localities.

2. Direct the commune-level People�s Committees to observe all regulations on setting up savings and capital-borrowing groups, discussing and selecting borrowers, certifying lists of poor households that fully meet conditions for loan provision, inspecting and supervising the use of loan capital, debt repayment and loan interest payment by borrowers.

3. Decide on the setting up and supervise operation of the representative boards of the Managing Board according to the Organization and Operation Charter of the Social Policy Bank.

Article 27.- The presidents of the commune-level People�s Committees shall have the responsibility to:

1. Draw up lists of poor households according to poverty standards promulgated by the Ministry of Labor, War Invalids and Social Affairs.

2. Direct the establishment and approve operation of savings and capital-borrowing groups.

3. Organize and direct the commune-level Steering Committees for hunger elimination and poverty alleviation programs to coordinate with the socio-political organizations in supervising the discussion and selection of poor households and other policy beneficiaries entitled to borrow capital, ensuring democracy and publicity; certify lists of poor households to borrow capital; coordinate with lending organizations, savings and capital-borrowing groups in inspecting the use of loan capital and urging debt recovery.

4. Comment on the borrowers� applications for debt extension and risk handling.

5. Coordinate with the district-level functional departments and branches, socio-political organizations, financing organizations and lending organizations in opening classes to provide guidance on cultivation, husbandry and processing techniques as well as knowledge about markets..., and the Social Policy Bank�s regulations on capital borrowing and debt repayment.

Article 28.- Organizations and individuals that record achievements in creating capital sources, well observing the lending regulations, thus bringing about practical efficiency shall be commended and/or rewarded.

Annually, the Managing Board and the representative boards of the Managing Board of the Social Policy Bank at all levels shall consider and propose commendation and reward in appropriate forms.

Chapter V

IMPLEMENTATION PROVISIONS

Article 29.- This Decree takes effect 15 days after its signing.

Article 30.- The ministers, the heads of the ministerial-level agencies, the heads of the agencies attached to the Government and the presidents of the People�s Committees of the provinces and centrally-run cities shall have to implement this Decree.

On behalf of the Government

Prime Minister
PHAN VAN KHAI